THE COURT OF APPEAL CAN RE-OPEN A DECISION TO REFUSE PERMISSION TO APPEAL WHEN IT IS ALLEGED THE JUDGMENT WAS OBTAINED BY FRAUD

In Bishop -v- Chhokar [2015] EWCA Civ 24 the Court of Appeal decided that it had jurisdiction to re-open an order refusing permission to appeal when it was alleged that a judgment was obtained by fraud.

THE CASE

The respondent (Mr Chhokar) had obtained judgment after a trial. The trial depended on the issue of credibility and the judge decided that issue in the respondent’s favour. The appellant sought permission to appeal that judgment. The application for permission was refused by the single judge in the Court of Appeal as being an attempt to re-open the issue of credibility and being “totally without merit”

At a later trial, in a different case between the parties, Mr Chhokar admitted that he he lied during the earlier trial.

“Judge Hammerton’s note of Mr Chhokar’s evidence is that he accepted that his witness statement for the case in front of her “directly contradicts what I told HHJ Knight”

The judge found against him Mr Chokar.

KEY POINTS

The Court of Appeal had jurisdiction to re-open a refusal of permission to appeal under CPR 12.17.

The possible right to bring a second action impugning the first action for “fraud” was not a realistic remedy. The existence of such a right did not represent an “alternative remedy” such as to prevent the court from exercising its discretion under CPR 52.17.

THE ATTEMPT TO RE-OPEN THE FIRST ACTION

The appellant then sought to re-open the earlier refusal of permission to appeal. The basis for this was that Mr Chhokar had admitted lying when giving evidence at trial and this would have had a material effect on the outcome of the case.

THE JUDGMENT: THE COURT HAD POWER TO RE-OPEN THE EARLIER REFUSAL AND SHOULD EXERCISE THAT POWER IN THIS CASE

The three requirements for re-opening a final appeal, or a final refusal of permission to appeal are set out in CPR Pt 52.17(1). They are cumulative. In the context of a request to reopen an application for permission to appeal, the tests are that the court has to be satisfied that (a) it is necessary to do so to avoid real injustice; (b) the circumstances are exceptional and make it appropriate to reopen the application for permission to appeal; and (c) there is no alternative effective remedy. The first two tests are not controversial although the court has to examine carefully the facts of the application before it before being satisfied that those tests are passed.

In this case I am quite satisfied, on the basis of the admission of the respondent in the hearing before HHJ Hammerton that he had lied before HHJ Knight and the basis on which Judge Knight came to his decision in that case, viz on the credibility of the witnesses, that it is necessary to reopen the application for permission to appeal in order to avoid real injustice. Moreover, I regard the circumstances which I have set out above as exceptional and they make it appropriate to reopen the application for permission to appeal.

It is the third test that causes difficulty. It has given rise to debate since CPR Pt 52.17 came into force in 2003. The question is: when it is asserted that the appeal (or permission to appeal) should be reopened because the original decision had been obtained by a fraud, is there an “alternative effective remedy” because the proper course, in circumstances where a party asserts that the original judgement was obtained by fraud, is that the party should start a fresh action to set aside the original judgment. If that is right, then the CPR Pt 52.17 procedure cannot be used to reopen an appeal where the original decision (or appeal) had been obtained by fraud.

There was no provision in the original CPR for reopening a final appeal or an application for permission to appeal that had been finally refused. The lack of such a remedy was recognised as a being an important omission in the new CPR in the judgment of a five judge Court of Appeal in Taylor v Lawrence [2003] QB 528. That judgment laid down guidance as to when an appeal could be re-opened. The new CPR Pt 52.17 came into force in October 2003 and was based on the principles set out in Taylor v Lawrence. Since CPR Pt 52.17 was brought into force there has been some debate as to the scope of this remedy. In two cases where CPR Pt 52.17 was invoked, the Court of Appeal permitted appeals to be reopened on the ground that the original decision had been obtained by deceit, perverting the course of justice or just “untrue evidence”: see Couwenbergh v Valkova[2005] EWCA Civ 145and Feakins v DEFRA [2006] EWCA Civ 699. However, in Sir William Jaffray v The Society of Lloyd’s [2008] 1 WLR 75, a two judge division of the Court of Appeal doubted whether what had become known as “the Taylor v Lawrence jurisdiction” was available in cases where it was alleged that the original decision had been obtained by fraud. Buxton LJ, giving the judgment of the court, pointed out that there was binding authority, in particular Flower v Lloyd (1877) 6 Ch D 297 (a decision of the Court of Appeal) and Jonesco v Beard [1930] AC 298 (a decision of the House of Lords on an English appeal), which had held that where a judgment is obtained by a fraud on the court then the correct remedy was not an appeal, but a new action to set aside the original judgment. However, in the light of various decisions of the Court of Appeal since Taylor v Lawrence, Buxton LJ reluctantly accepted that there was a jurisdiction to reopen a determined appeal on the ground of fraud underCPR Pt 52.17, but only if certain strict conditions were fulfilled.

The issue was reconsidered by the Court of Appeal in Noble v Owens [2010] 1 WLR 2491. The allegation there was that the claimant had been fraudulent in giving his evidence about the extent of continuing disabilities following a motor accident. After the claimant, Mr Noble, had obtained substantial damages at the trial, the insurers of the defendant driver obtained video evidence of his activities. The insurers asserted that this evidence put in doubt the claimant’s evidence at the trial as to the extent of his disabilities. The defendant appealed against the award of damages and sought an order for a retrial on the ground that the new evidence demonstrated that the judgment had been obtained by fraud.

Noble v Owens is not, therefore, a case that directly involved CPR Pt 52.17. However, the court considered the relevant authorities includingFlower v Lloyd, Jonesco v Beard, Taylor v Lawrence and Sir William Jaffray v Society of Lloyd’s as well as others, including the House of Lords’ decision of Kuwait Airways Corporation v Iraqi Airways Co (No 2) [2001] 1 WLR 429. That case had followed Jonesco v Beard and held that where it was asserted that a decision had been obtained by fraud, then a challenge had to be made by a fresh action alleging and proving the fraud.

In Noble v Owens Smith LJ gave the first judgment. She held, at [27] that the “true principle of law” (to be derived from Jonesco v Beard) is that:

“…where fresh evidence is adduced in the Court of Appeal tending to show that the judge at first instance was deliberately misled, the court will only allow the appeal and order a retrial where the fraud is either admitted or the evidence of it is incontrovertible. In any other case the fraud must be determined before the judgement of the court below can be set aside”.

As Mr Buley pointed out in his written submissions, that statement of principle does not say that fraud cannot be relied upon as a ground of appeal. Rather it sets out a substantive rule of law on what has to be established before an appeal will be allowed and a retrial ordered on the basis of an allegation of fraud. Elias LJ gave a separate judgment where he considered the principles and the cases and reached the same conclusion of principle.

Both he and Smith LJ concluded on the facts of that case that the new evidence raised a serious question of fraud which had to be reconsidered and the only question was how that should be done. They concluded that it was, in the circumstances, not necessary to start a fresh action; instead the issue of the fraud should be referred to a High Court judge pursuant to CPR Pt 52.10(2)(b). If the judge found the fraud proved then he would reassess the damages to be awarded.

Sedley LJ’s judgment arrived at the same result but by a slightly different route. He emphasised that it was not the judgment itself that was being attacked in that case, but the level of the award of damages for disability. He agreed with the course proposed.

The question that arises, therefore, is whether there is a bar to invoking the CPR Pt 52.17 procedure in a case where it is alleged that the original decision was obtained by fraud, because there is another “effective remedy”, viz. the remedy of starting a new action to set aside the original decision as having been obtained by fraud. Mr Buley made three submissions on this issue with which I agree. The first concerns the jurisdiction being exercised when, in a second action between the same two parties, a court sets aside the earlier decision between those parties on the ground that it was obtained by fraud. It would appear from the judgment of Sir George Jessel MR in Flower v Lloyd (No 1) (1877) 6 Ch D 297 at 299-300that if such a remedy were to be granted, the court (then the recently established High Court of Judicature) would be exercising an “inherent jurisdiction” to grant such a remedy and this jurisdiction is based upon the law as previously established in the old Court of Chancery. Jessel MR quoted this law from the “well known treatise of Lord Redesdale”.[1] The treatise stated that if a decree in chancery had been obtained by fraud, it could be impeached by an original bill in chancery. That jurisdiction and that remedy was transferred to the High Court by the Judicature Acts. Mr Buley pointed out that in the subsequent case of Flower v Lloyd (No 2) (1878) 10 Ch D 327, the Court of Appeal doubted whether an action to impeach a previous judgment between the same parties on the ground of fraud could be maintained. It would appear that those doubts have not persisted. Indeed the availability of the remedy to set aside a previous judgment on the ground that it was obtained by fraud was reaffirmed in the recent decision of this court in RBS v Highland Financial Partners [2013] 1 CLC 596at [106].

Mr Buley’ second submission followed on from his analysis of the nature of the jurisdiction and remedy to set aside a previous decision which had been obtained by fraud. He pointed out, first of all, that the County Court is the creation of statute. Unlike the High Court which inherited the powers of the old Court of Chancery, the County Court has no inherent jurisdiction to set aside its own final orders. Moreover, he submitted, there must be some doubt as to whether it has jurisdiction to determine a free-standing claim to set aside a previous decision of the County Court, which second claim is based on an allegation that the first judgment was obtained by fraud. Mr Buley submitted that it is not clear that this kind of action comes within the scope of Part II of the County Courts Act 1984 which sets out the statutory basis for that court’s jurisdiction. Mr Buley’s also submitted that, although in principle a fresh action could be brought in the County Court on the original cause of action and any defence of issue estoppel or res judicata could be defeated by relying on the alleged fraud, but that does not cover every case. Lastly he noted that CPR Pt 3.1(7)(power to vary or revoke an order made), cannot provide the original jurisdiction: see Roult v NW Strategic HA [2010] 1 WLR 487at [15] per Hughes LJ.

Given these difficulties of mounting a second action in the County Court to set aside or rescind the first judgment, in his third main submission Mr Buley addressed us on the question of whether there could be an “effective alternative remedy” in the form of an action in the High Court to impeach the original County Court decision. He argued that it is seriously open to doubt whether the High Court has any such jurisdiction. Challenges to decisions of the County Court are normally dealt with by appeal. The High Court does have the power to quash an order of an inferior tribunal such as the County Court, pursuant to CPR Pt 54.2(c), but I agree with Mr Buley that it is very much open to doubt that this procedural power was intended to be used in fresh proceedings to set aside or rescind a judgment in circumstances where it is alleged that the original order was obtained by fraud. We were not shown any example of that jurisdiction being used in such a manner.

In the course of the hearing we did not fully investigate all these points. It seemed to us that there was sufficient in all the points that Mr Buley brought to our attention to conclude that, in this case, there was not an effective alternative remedy in a collateral action of the kind envisaged inFlower v Lloyd (No1) and Jonesco v Beard. Any possible alternative remedy had such jurisdictional and procedural difficulties that meant it could not be regarded as “effective”.

Why the court decided to allow the CPR Pt 52.17 application and grant permission to appeal.

Given the analysis above, we concluded that we had jurisdiction to grant the application to re-open the refusal of Jacob LJ to grant permission to appeal the judgment and order of HHJ Knight. In my view, if the requirements of CPR Pt 52.17(1) are fulfilled, the Court of Appeal is almost bound to conclude that in the particular case in hand it should grant the application to re-open an appeal or a final refusal to grant leave to appeal, although I would accept that there may be a residual discretion to refuse to do so even if the requirements are fulfilled.

On the facts of this case, however, I concluded that we must, in the circumstances, grant the application.

It also seemed to me (and to McCombe and Christopher Clarke LJJ) that there is a reasonable prospect that the appeal would succeed, although success is not certain. There is a reasonable argument that HHJ Knight found against the Bishops and in Mr Chhokar’s favour because he found Mr Chhokar a more credible witness than Mr Bishop and that if Mr Chhokar had told the truth about the fireworks his view overall might well have been different. Even if that is the final conclusion of the appeal, the consequence of that conclusion will need debate. Should there be a retrial so many years after the original trial, when Mr Chhokar is now a bankrupt, his trustee in bankruptcy has shown no interest in the matter and the sum at stake (although not the costs) is comparatively small?

Those are all matters for the court to decide at the appeal itself and I should say no more now.

Disposal

For these reasons we decided to grant the application to re-open Jacob LJ’s order of 30 November 2010 and to set it aside; to grant permission to appeal the judgment and order of HHJ Knight QC dated 20 July 2010; and, make orders as to the appeal hearing itself.”